Stark law was written before the internet, EHRs or AI-driven diagnostics existed. But it is still dictating how physicians can structure financial relationships in 2026, and a growing chorus of physicians, legal experts and industry groups say it is time to let it go, according to an April blog post from Holt Law.
“The Stark law is a legal dinosaur that treats modern healthcare coordination like a criminal enterprise,” the blog post reads. “While it was built to protect the system in the 1980s, it has evolved into a multi-billion dollar administrative landmine that punishes clinical innovation and rewards bureaucratic complexity. Quite frankly, all it does is help hospitals and healthcare lawyers get rich.”
Here is why the law firm believes the law should be overturned:
1. Stark law is a relic of a different era. It was designed in the late 1980s to stop physicians from ordering unnecessary tests at facilities they had a financial stake in, protecting Medicare from self-dealing under a fee-for-service system.
2. Healthcare has fundamentally changed. The industry has shifted toward value-based care, in which providers are rewarded for patient outcomes rather than volume.
3. The law blocks care integration. Any financial alignment between hospitals, specialists and primary care providers can trigger a violation, making the coordinated networks that value-based care requires nearly impossible to build legally.
4. Strict liability creates disproportionate harm. Because intent does not matter under Stark law, a clerical error, such as an expired contract or a typo in a lease, can result in fines and forfeited Medicare reimbursements, punishing physicians for paperwork mistakes rather than misconduct.
5. It is redundant. The Anti-Kickback Statute and the False Claims Act already cover genuine fraud, with the fairer standard of requiring proof of intent. Stark simply adds a costly compliance layer.
6. It is hindering innovation. Technology and AI partnerships between physicians and health tech companies frequently collapse because the financial arrangements are too legally risky to structure under current rules.
7. Modern tools make the original safeguards unnecessary. Real-time AI auditing, outcome-based payment models, and comprehensive EHR data trails make it far easier today to detect and prosecute actual fraud without a blanket prohibition law.
8. Physician groups agree with the law firm’s assessment. Industry groups, including the Medical Group Management Association, have pushed for changes, calling Stark a major regulatory burden. The MGMA’s stated reform priorities include modernizing compensation arrangement rules, simplifying the statutory “group practice” definition and adjusting penalty provisions so fines are more closely tied to demonstrable harm from prohibited referrals.
9. Stark law is colliding with the realities of consolidation and employment. Some independent and employed physicians described Stark as a law that was designed to prevent conflicts, but now seems as if it can entrench system-based referral expectations and intensify administrative oversight of referral patterns.
Niazy Selim, MD, a private practice gastrointestinal surgeon in Lake Charles, La., told Becker’s in March that the current healthcare system leaves physicians practicing medicine “with their backs against the wall” amid the growing pressures of consolidation and administrative burdens. Other physicians echoed concerns that referral pattern tracking and “keep it in-system” pressure can limit physician autonomy and patient choice.
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